Your Family Matters

Trusts have some advantages over wills

On Behalf of | Mar 22, 2024 | Estate Planning

Nearing or entering retirement often triggers major decisions and questions. For some, this might mean beginning the estate planning process; however, for many, it might look like revisiting their current plan for updating or modification.

When creating an estate plan, the goal is to protect your assets as well as your loved ones. A will is often used to meet that goal; however, it might not always be the best or most practical mechanism. In some situations, it might be better to establish a trust over creating a detailed will that bequeaths to your heirs.

Trust basics

When you establish a trust, you can name yourself, a family member, charity or another beneficiary. Whomever is named will receive the proceeds of any income created by the trust.

When you create a living trust, you are the beneficiary; however, you are also able to have the trust automatically convert to a named beneficiary after your death.

Advantages of a trust

While both wills and trusts distribute assets and property after your death, property bequeathed in a will cannot be distributed until the will goes through the probate process. Thus, an advantage of a living trust is that it can be executed without any probate process. Another advantage of a living trust is the ability to move assets into the trust over time. Lastly, after you pass, the instructions of your trust will be carried out immediately.

Trust pitfalls

A trust is no better than the trustee that oversees it. In other words, the trustee is in a position of power, and their actions can impact the trust. While the trustee is a fiduciary and has legal obligations to the trust, there is always the possibility of impropriety.

Additionally, the costs and benefits are often dependent on the type of trust created. Some types of trust can make it difficult to move assets out or make changes to the beneficiaries.

There are a lot of factors to consider when creating a trust. A legal professional can help you better understand how to meet your estate planning goals while also protecting yourself and your assets.